Market 28th Augh 2011
- There are not many distribution days ( selling) found in the last few days. Looks like it is a bottom temporarily.
- Buying volume is more than Selling volume. Lets see how the buyers will show up in the coming days.
August 2011
Silver ( SLV )
- Silver (SLV) wants to follow the Gold ( GLD) .
- Silver has enough rest for the last few weeks and volume of buying has increased for the last 3 -4 days.
- Fed is printing more money+ Dollar is down + Debts ( US + Europe ) = Precious metals are up ( gold, silver, platinum etc).
Tsunami washes everything
What will happen when Tsunami comes ?
Everything washes away …doesn’t matter whether it would be small & big boats … good & bad ships.. good & bad sailor..
How can you avoid Tsunami ? Just run away from shore..Do not think…Just run away wherever you are..
Same in the case of stocks..Just close all positions..No matter what whether it has good or bad fundamental stock ….Just close all positions.. You can buy back once Tsunami settles..
Mantra is Cut short losses…Cut short losses…Cut short losses..
Market 08/07/2011
- Market is entered into BEARISH stage as it broken down long range.
- You might see the 1-3 day short rally and but ultimately it will breakdown more.
- Cash is King at this point.
- Lot of institutions are selling at this point
- Even good news is not turning up the market ( like jobs report) , so it clearly indicates market will go down.
- Be aware if you are holding any stock in your portfolio.
Cut losses Short
Let me take a scenario on a Retail shop. Normally shop owners buy the different kinds of products to keep it in their shop. First, they buy the products with small amounts, and later on they will add the quantity if the customers are interested in those products. If the customers are not interested in any of the product, they keep in the ON SALE area and want to rid of those products from the shop as soon as possible.
Same principle works in managing the stocks. Initially you need to buy quality stocks with very small amounts, if it is acting well and going up as you expected, then you need to add more. This is called Pyramiding. If it is going against you, then you need to sell immediately by taking small loss.
If you don’t take losses short and keeping un-favored stocks in the portfolio for a long time and it will lead you big losses. Even in the shop, owners won’t piled non-saleable products for a long time. I have seen some people are holding Citi Group (C), Bank of America (BAC) etc for a long term and eventually they take big losses. They don’t have good earnings, sales and still they are holding, because they like those stocks.
Owners should not like the product in the shop, it is the consumers should like the product and they decide whether to keep in the shop or not.
It is same in the case of stocks. You should not like the stock and , moreover, buyers should decide whether to keep it in your portfolio.
You need to take the 5-8 % risk for any stock. If you are risking the more than 8% with your buy point , then there is something is wrong with YOU. If any stock is breaking down more than 8% with proper buy point, then the stock is not ready to move up at that moment. You can buy back later if it sets up.
If you apply this simple principle in real scenario, you will succeed in any business.
Market 02/08/2011
- After 2 years run, market is taking big rest from Jan onwards.
- Nothing works, neither longs nor shorts, when the market is in rest period. You can see people are very emotional and lot of volatility during this period.
- Better to be in the cash until the market is determine the direction( bearish or bullish).